CUPPA Market Plan: External Analysis, Strategy, and Positioning

This report provides a comprehensive market plan analysis for CUPPA, focusing on its new line of reusable products. It begins with a SWOT analysis, assessing CUPPA's strengths (financial resources, consumer base) and weaknesses (lack of direct selling, limited market knowledge), as well as identifying opportunities (increasing demand for eco-friendly products) and threats (market competition). The report then delves into a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing CUPPA's market. Furthermore, it applies Porter's Five Forces to evaluate the competitive landscape, including supplier and customer bargaining power, competitor analysis, and the threat of new and substitute products. The analysis continues with market segmentation, target market identification (medium and high-income customers), and positioning strategies. Finally, the report outlines potential competitive strategies (cost leadership and differentiation) and highlights CUPPA's competitive advantages, such as its Australian manufacturing unit and distribution network, providing a clear roadmap for CUPPA's success in the reusable products market.

MARKET PLANNING

Table of Contents
1. Strength and weakness of CUPPA.........................................................................................3
2. Analyzing external environment of CUPPA..........................................................................4
3. Segmentation, target market and positioning.........................................................................7
4. Potential competitive strategy and competitive advantages...................................................8
Reference list............................................................................................................................10
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1. Strength and weakness of CUPPA
SWOT analysis can be performed for evaluating the strengths and weaknesses of CUPPA.
Besides, various threats and opportunities can also be analyzed through the help of this
process.
Strength Weakness
● CUPPA is a profitable and
established business
● Good consumer base
● Presence of sufficient financial and
other resources
● No direct selling of products through
stores and online
● Lack of knowledge about the current
market condition
Opportunities Threats
● The increasing trend of using
environment-friendly products
● No regulatory or licensing issues
● Increased competition in the market
Analysis
Strength: CUPPA has different strengths, which can help the company to extend its new line
products properly. As said by Wood (2014), a firm needs to have sufficient resources to
expand business and bring in a new line of products. CUPPA has sufficient financial and
other resources such as a manufacturing plant in South Australia. Presence of sufficient
resources can help this firm to meet demands of current and potential customers. Moreover,
this firm has a good consumer base such as restaurants and cafes. They have partnerships
with large retail stores such as Kmart, which can help them to distribute products efficiently.
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Weaknesses: CUPPA has no facilities of direct selling of products and they have less
knowledge about the current market condition of reusable items. Effective strategies need to
be framed such as establishing factory outlets, which help a firm to establish direct consumer
contact (Hooley et al. 2012).
Opportunities: Due to environmental pollution and climate change many people are
adopting use of reusable products. This is a great opportunity for CUPPA to establish the new
product line that includes reusable sups, straws and lids. CUPPA has no regulatory issues are
there at present. As mentioned by Cravens and Piercy (2009), legal issues can create
obstruction for a business to conduct normal operations.
Threats: There are many competitors in the market who are manufacturing and selling these
products. Increase in the trend of using reusable products will also increase the number of
competitors, which is a major threat for CUPPA.
2. Analyzing external environment of CUPPA
PESTEL
● Political: At present, Australia has stable and safe political conditions which are
supportive to business. According to Sharp (2013), it is the 6th largest country of the
world and the government of this country is supportive to industries. Australia is
maintaining a good political relationship with the United States. This stable political
condition of this country can help CUPPA to introduce their new line of products. The
government of this country has mentioned that more than 3 billion disposable coffee
cups are used each year in Australia and it is important to encourage people to use
reusable cups (Meetings.cityofsydney.nsw.gov.au, 2019). It means CUPPA may get
the support from the government in introducing reusable cups, lids and straws.
● Economical: Australia is considered as the 13th largest economy of the world.
Previously, this country has experienced a rapid economic growth for seventeen years
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before the occurrence of the global financial crisis. In 2018, the average growth of
GDP was recorded 3% approximately. In a report of council resolution of council, it
has been mentioned that manufacturing reusable cups are innovative and
environmentally friendly Number of employment opportunities and total number of
employed people are increasing day by day in Australia. As stated by Smigielska and
Stefanska (2017), it means that the economic condition of Australians is improving
and the majority of them can afford reusable cups now.
● Social: This country is one of the best countries in the world to live. At present, about
22.9 million people are living in Australia. However, the number of retirees is higher
than the number of working people. As mentioned by Anning-Dorson et al. (2018),
this kind of condition may limit growth of businesses. The education system of this
country is well-developed and every year a huge number of students visit Australia
for educational purposes. It means the majority of the Australian population is literate
and they are concerned about protecting the environment. Hence, CUPPA will get
more customers for their new products including reusable cups, lids and straws.
● Technological: Australia is renowned for focusing on technological advancement.
Small, medium and large organizations of Australia are investing on technologies to
enhance revenue generation. However, as stated by Bocken et al. (2016), a large
amount of funds are required for implementing advanced technology within the
business. CUPPA has financial stability and they are able to hire the best expert to
implement advanced technologies for producing reusable cups, lids and straws.
● Environmental: Australia is experiencing some challenges due to climate change
(Bauner and Wang, 2019). Increasing rate of industries in this business is causing a
negative impact on the environment. This plan of manufacturing reusable cups, straws
and lids is a good approach to reduce the harmful impact of disposable cups on the
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environment. Due to this reason, this extension of the product line can be appreciated
by consumers.
● Legal: Several legislations have been introduced by Australian government to protect
the rights of both consumers and businessmen (Cantamessa and Montagna, 2016). For
example, competition laws, the fair trading laws and consumer laws need to be
maintained by CUPPA for avoiding legal issues due to extending the product line.
Porter’s five forces analysis
This is another essential tool, which can be used to analyze the external competitive
environment of a business. Risk level from different parts of markets like suppliers,
competitors and customers are measured and analyzed through this tool.
● Bargaining power of supplier (low): The risk level that CUPPA will have to face
from suppliers is low. This is because raw materials used for making reusable coffee
cups such as ceramics are available from different sources. Hence, suppliers have a
less bargaining power. As stated by SHTAL et al. (2018), lack of source of supply
increases bargaining power of suppliers. Hence, it can be said that the chance of
supply chain disruption is low in case of CUPPA as there are many suppliers.
● Bargaining power of customers (High): This force refers to the pressure that
consumers of a form can put on a business. This pressure can be to achieve products
at lower prices or higher quality products. As said by Abugalia and Mehafdi (2018),
presence of a higher number of competitors in the market increases the threat from
customers. In Australian market there are a large number of competitors of CUPPA,
which has increased the risk level from customers. If consumers do not achieve
products at the desired price or quality then they can easily switch the firm. CUPPA
needs to formulate strategies to engage customers that can enable them to establish
strong bonds with consumers.
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● Competitors (High): At present there are many competitors of CUPPA who offer the
same products to the customers in Australia. This includes Onya, Cupy, Uppercup and
others. Moreover, UK based brand Ecoffee also ships their products like reusable
coffee cups in Australia and New Zealand. CUPPA needs to formulate effective
marketing strategies and need to bring innovation in product designing to gain
competitive advantage. As opined by Massa et al. (2017), innovation and creativity
during product designing and selling helps a firm to create a distinctive place in the
market. Making colorful and well-designed products can help CUPPA to provide
proper values to customers that can help them to gain their loyalty.
● Threat of new entrants (Medium): This refers to the threat that can be posed by any
new competitor in the market (Joyce and Paquin, 2016). CUPPA itself is a new
competitor at present as they are going to extend their product line to manufacture
reusable cups and other products. As this sector is blooming, any new entrant can
pose threat to this firm in future. However, CUPPA is an established business with
sufficient financial resources, which can make it difficult for new entrants to give
tough competition. Therefore, the risk level is medium in this case.
● Threat of substitute product (Medium): Reusable cups are being used by customers
to substitute plastic cups that are not friendly to the environment. The risk level is
medium in this case because there is an increasing trend of using these products and
there is less chance of substitution by other products. However, high cost ceramics
cups can be substituted by low cost reusable cups in future. CUPPA needs to extend
its product line further to increase the range of reusable cups for coping up this threat.
3. Segmentation, target market and positioning
Segmentation: This Company needs to target two segments of consumers. These two
segments need to include consumers who are concerned about protecting the environment
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and customers who are not aware of this matter. According to Lokuwaduge and Heenetigala
(2017), it is the responsibility of the business to aware potential customers about the
importance of eco-friendly products to enhance their customer-base.
Target market: This Company needs to target both medium and high-income customers for
the new product line. Range of prices can be set to help both types of customers purchase
reusable cups, straws and lids directly from this company. They need to fix lower to medium
prices for reusable cups, lids and straws to sell these products to the majority of Australians.
Positioning: CUPPA needs to position their business through ensuring point of difference
and point of parity. As mentioned by Sharp (2013), appearance and the quality of the new
products must differ from similar existing products. On the other hand, this company needs to
make their consumers understand that the concept of a reusable cup is good enough to be
considered. These approaches can help this company to achieve and sustain a good position
within the marketplace.
4. Potential competitive strategy and competitive advantages
CUPPA can devise two competitive strategies for the new product line. Cost leadership
strategy can be implemented by CUPPA initially, which is also called low cost strategy. As
said by Wood (2014), organizations which follow this strategy intend to become an overall
low cost provider in the whole market. Presence of sufficient financial resources can help
CUPPA management to devise this strategy primarily to attract target customers. After some
time of operation, CUPPA can implement differentiation strategy, which is related to
product differentiation. This means manufacturing a firm’s product different from other
similar products of competitors. This can be done by conducting more research and
development and manufacturing products with creative designs.
CUPPA has some competitive advantages that can help them to gain a distinguished position
in the market. This includes the presence of a manufacturing unit in Australia, which has
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saved additional cost and time of the firm. Moreover, it has a good distribution network that
includes retail stores like Kmart. These competitive advantages can help CUPPA to gain
success with the new product line.
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Reference list
Abugalia, M. and Mehafdi, M., 2018. The Influence of External Environment and Business
Strategy on the Effectiveness of Management Accounting Practices: A Contingency Theory
Perspective. Scientific Research Journal, 6(2), pp.87-99.
Anning-Dorson, T., Hinson, R.E. and Amidu, M., 2018. Managing market innovation for
competitive advantage: how external dynamics hold sway for financial services. International
Journal of Financial Services Management, 9(1), pp.70-87.
Bauner, C. and Wang, E., 2019. The effect of competition on pricing and product positioning:
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business model strategies for a circular economy. Journal of Industrial and Production
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Cantamessa, M. and Montagna, F., 2016. From Market Research to Product Positioning. In
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Positioning, 5th edn, Pearson, Harlow, United Kingdom.
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more sustainable business models. Journal of cleaner production, 135, pp.1474-1486.
Lokuwaduge, C.S.D.S. and Heenetigala, K., 2017. Integrating environmental, social and
governance (ESG) disclosure for a sustainable development: An Australian study. Business
Strategy and the Environment, 26(4), pp.438-450.
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Massa, L., Tucci, C.L. and Afuah, A., 2017. A critical assessment of business model
research. Academy of Management Annals, 11(1), pp.73-104.
Meetings.cityofsydney.nsw.gov.au. (2019). Resolution of Council. Available
at:https://meetings.cityofsydney.nsw.gov.au/documents/d1137/Printed%20decision
%20Reusable%20Coffee%20Cup%20Scheme.pdf?T=5 [Accessed on 14th April, 2020]
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Melbourne, Australia.
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